The Government of India generates its major source of income through income tax collection, which provides a significant pool of funds every year for various public welfare schemes, economic regulations, and government-based employment initiatives.
Thus, it is crucial for the income tax department to monitor any suspicious transaction aimed at evading or concealing income tax.
There are certain types of transactions that draw the attention of the Income Tax Department and may prompt further investigation.
Here’re the Top 10 Transactions that Alert Income Tax Department
Higher Donations or Education Fee
Any payment made for education fees or donations exceeding ₹1 lakh will trigger an alert for the Income Tax Department, leading to further scrutiny of the transaction.
Additionally, educational institutions are obligated to provide Form 16A to parents if they have paid more than ₹1,00,000 per annum.
Paying an Electric of ₹1 Lakh P.A
If you own a significant property generating an electricity bill of over ₹1 lakh per annum, the Income Tax Department may investigate your transactions and question the source of funds.
Domestic and Foreign Travel
In case of air travel, particularly in business class or abroad, the Income Tax Department may inquire about the source of funds used for such travel.
It is advisable to maintain all related documents, including flight tickets, boarding passes, hotel bills, and visa receipts, for tax filing purposes.
Large Hotel Bills
If you spend more than ₹20,000 on a hotel stay, the Income Tax Department may scrutinize your transactions.
Therefore, it is essential to keep all travel-related documents secure and accessible for tax filing purposes.
Luxury Items Worth Over ₹1 lakh
When luxury items such as jewellery, marble paintings, etc. are purchased for more than ₹1 lakh, the Income Tax Department may investigate the source of funds used for the transactions.
Balance or Deposits of Over ₹50 Lakh in Current Account
If you make a transaction exceeding the limit of ₹50 lakhs or maintain the same amount of balance in your current account, the Income Tax Department may scrutinize your transactions.
Having More than ₹25 Lakh in Savings Account
If you have a savings account balance of more than ₹25 lakhs or have made credit transactions equal to or exceeding this limit, the Income Tax Department may examine your transactions.
Paid Property Tax Above ₹20,000
If you are paying property tax amounting to ₹20,000 or more, the Income Tax Department may investigate the transaction.
Paid Life Insurance Premium of ₹50K
If you pay a life insurance premium exceeding INR 50,000, the Income Tax Department may scrutinize the transaction.
It is crucial to maintain all related documents, including insurance policy documents, receipts, and bank statements, for tax filing purposes.
Health insurance premium of 50K
When paying a health insurance premium of over INR 50,000, the Income Tax Department may examine the transaction.
It is necessary to maintain all related documents, including insurance policy documents, receipts, and bank statements, for tax filing purposes.
